FinCEN’s Beneficial Ownership Rule and its Impact on One Payment Processing Solution
- David Sharp, President at PaySimple
- 14.06.2018 10:00 am undisclosed , David Sharp, PaySimple's President, joined PaySimple in 2007 and is passionate about helping PaySimple’s customers, employees and investors realize their full potential with the simplicity and flow that PaySimple’s commerce enablement platform brings to the marketplace. David has 21 years of experience in the payments and software industry, including eight years as Vice President of the Western Region for Global Payments. During his career, he has led business development for payment network processing, agent bank and ISO programs, as well as a variety of alternative payment solutions. David served as a non-commissioned officer in the U.S. Army following graduation from the Defense Language Institute and holds a BBA in International Business from the University of Georgia.
As a payments software company, we at PaySimple are inextricably impacted by the Federal Government and its rules and regulations on all things finance.
Lately, one such regulation that has caused us to reevaluate and revamp our approach to consumer security and fraud protection, is the new FinCEN Beneficial Ownership Rule.
On May 11, 2018 the United States Department of Treasury, Financial Crimes Enforcement Network (FinCEN), Beneficial Ownership Rule, or the Rule, went into effect. The Rule requires financial institutions subject to Customer Identification requirements (CIP) to verify the identity of all beneficial owners of a legal entity.
Like most government regulations the Beneficial Ownership Rule is complex. The consolidated 37 question FAQ issued by FinCEN is testament the intricacies of the regulation. It covers layers of questions and answers about what legal entities are exempt vs. non-exempt, how to navigate complex ownership structures, how to accurately determine percentage of ownership, ownership vs. control prongs, and which methods financial institutions are permitted to use to collect information to enforce the rule.
No doubt, the Feds are looking out for all of us, but it’s a big system. Where do they begin? At the front line.
The Rule is intended to require financial institutions to collect information at the initial application stage to develop risk profiles that protect the entire financial system from illegal activity such as money laundering, identity theft and other illicit activity.
Although payment processing software solutions such as PaySimple are not directly, legally obligated to comply with the new FinCEN Beneficial Ownership Rule and CIP requirements, we are a key link in the chain to reduce fraud and protect the payment system.
PaySimple is on the front lines facing one of the most common strategies of identity theft: fraudsters applying online for a merchant account. By doing our part in the Rule enforcement, we will collect the required documentation so the financial institution, in this case the payment processor, can complete the necessary due diligence to verify identity and ownership to determine a prospect’s legitimacy.
To help our processors comply with the Rule and take our mission of providing a safe, secure payment processing experience to our merchant customers, we’ve updated our internal operating systems and application processing software to collect the necessary beneficial owner information.
Fraudsters are getting more and creative with their approach to scamming American business owners and consumers, so the Beneficial Ownership Rule and future FinCEN regulations are going to have continuous impacts on any company that does business in the financial industry. The key for us, is to stay agile and stay focused on our primary objective—to provide secure payment processing solutions for our customers.
About PaySimple:
PaySimple is the leading Service Commerce platform for businesses, supporting the success of over 17,000 companies in the United States. PaySimple enables businesses to market services, accept payments, and retain customers using one end-to-end solution that covers everything from payments and appointments, to online sales and customer management. Products include: Service Point of Sale, Payment Forms & Online Store, Appointment Scheduling, credit card and e-check processing, Recurring Billing, Mobile Payments, Secure Customer Management, e-Invoicing, cash flow reporting, and more.
